Saudi Arabia's Sabic to merge two Jubail units under efficiency drive
Sadaf will cease to exist as a legal entity after its merger with Petrokemya completes in H2 2019, Sabic confirmed
Saudi Arabia Basic Industries Corp (Sabic) has announced plans to merge subsidiary Saudi Petrochemical Company (Sadaf) into fellow unit Arabian Petrochemical Company (Petrokemya) under an efficiency drive.
According to a filing on Saudi stock exchange Tadawul, all of Sadaf's asset, rights, liabilities, and obligations will be transferred to Petrokemya.
The merger, subject to relevant regulatory approvals, will result in Sadaf ceasing to be a legal entity .
According to Bloomberg, Sadaf produces ethylene, crude industrial ethanol, styrene, caustic soda, and other petrochemical products. Based in Jubail, the company was founded in 1980.
Sabic said the move is part of its “strategic transformation plan to increase efficiency and [the] competitiveness of its global operations”.
Its missive to Tadawul added: “Sabic’s aim with the merger is to create a more efficient entity that will increase the optimisation of assets and unlock value from the synergies between the two companies’ product streams.”
The merger is expected to complete in H2 2019, and is unlikely to have a material impact on Sabic’s financial position.
Meanwhile, Petrokemya is based in Jubail Industrial City, and was founded in 1981. Its production output includes ethylene, polyethylene, polystyrene, butene, benzene, butadiene, propylene, polyvinyl chloride, and vinyl chloride monomer.
The news comes less than two months after Sabic reported a 12% decline in net profits for Q4 2018, despite a 17% year-on-year hike in 2018 profits.
Sabic attributed the drop in income to “lower average selling prices and decrease in share of results of associates and joint ventures”.